Amazon expects cloud revenues to eventually overtake that of its global retail operation
Amazon remains defiantly committed to its Cloud operation, and believes that Cloud-based revenues will eventually overtake its traditional retail business in terms of sales.
That is the bold claim of Andy Jassy, the head of Amazon.com, the Web services division of Amazon, speaking at the annual Amazon Web Services conference in Las Vegas.
Jassy’s expectation of Amazon’s Cloud success comes despite growing competition from some heavyweight tech players, with deep financial pockets.
Google and Microsoft are both mounting a stiff challenge to Amazon Web Services (AWS), which has triggered a fierce price war. And yet Jassy is not fazed by the large cash reserves held by Amazon’s Cloud rivals.
“I don’t view that as a differentiator,” Andy Jassy was quoted as saying by the Wall Street Journal. “We are highly confident inside of Amazon that we’ll be able to fund this business to its potential.”
Jassy also took the opportunity to reiterate his previous stance that he expects Web services to one day surpass Amazon’s traditional retail business in revenue. It is worth noting he did not put a timeframe on this, but it is estimated (by analysts) that AWS generates nearly $4bn (£2.5bn) per year in sales, which is more than 40 percent from the previous year.
Amazon’s retail operation is known to generate roughly $70bn (£44.4bn) a year, so the Cloud business has some way to go before it can match the retail side. However Jassy did confirm that AWS has more than one million active customers. Amazon previously had said it had “hundreds of thousands” of customers.
And such is Amazon’s belief in its Cloud business, that Jassy confirmed that Amazon intends to open multiple data centres in every major country in the world.
Data Centre Expansion
“We are prepared to invest as much as it takes to grow the business,” Jassy was quoted as saying by Reuters. He said that Amazon plans to build data centres in “virtually every large country” over time.
At the moment, Amazon is known to have data centres spread across 11 regions, namely in the United States, Ireland, Germany, Singapore, Australia, Brazil, China, and Japan.
Amazon is now reportedly considering opening a new data centre in India. But building data centres is an expensive business, and Amazon recently reveals in a securities filing that it intends to spend $1bn (£634m) over the next three years on a data centre in Ohio in the United States.
When Jassy was asked if it takes $1bn to build a data centre, he said that figure was “wrong by a lot.” He did not reveal how much it costs Amazon to build a data centre.
That will not please Amazon’s long suffering investors, as continued quarterly losses bear witness to Amazon’s heavy financial investments.
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